ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA) Q3 2024 Earnings Call Transcript

ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA) Q3 2024 Earnings Call Transcript March 14, 2024

ImmunoPrecise Antibodies Ltd. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, ladies and gentlemen. Thank you for joining us today for IPA's Earnings covering the Third Quarter of Fiscal Year 2024. I am Mandip, and I have the privilege of hosting this call. Before we commence, I would like to draw your attention to the fact that our discussions today may include forward-looking statements. These statements are subject to various risks and uncertainties that could cause actual results to differ materially from what we expressed or implied. We strongly encourage you to review our filings with the Securities and Exchange Commission for a comprehensive discussion of these risks and uncertainties. IPA remains committed to complying with legal requirements and will update forward-looking statements only as mandated by law.

During today's conference call and the accompanying presentation slides, we will employ non-GAAP financial measures to assist investors and analysts in comprehending IPA's business performance, adjusted EBITDA in particular allows the meaningful comparisons and analysis of trends in our business over different periods. For a detailed explanation and reconciliation of these non-GAAP measures to GAAP measures, please refer to the management discussion and analysis section of our filing on EDGAR and SEDAR. Now without further ado, I would like to pass the floor to IPA CEO, Dr. Jennifer Bath who will provide an overview of our quarterly results.

Jennifer Bath: Thank you, Mandeep, and good morning, everyone, and thank you for joining us for our third quarter earnings call for the fiscal year 2024. In this quarter, we've yet again proven our capability to flourish amidst a challenging macroeconomic environment, highlighting the relevance and effectiveness of our strategy, along with our adaptability. Our strategic foresight and comprehensive suite of end-to-end antibody services that we offer have been instrumental in securing this consistent growth. A significant portion of our R&D efforts this quarter has been directed towards supporting BioStrand, our artificial intelligence subsidiary, reflecting our belief in its transformative potential for drug discovery. By strategically focusing our investments and maintaining prudent cost management, we affirm our commitment to innovation, operational excellence, and the strategic development of our company to meet the evolving needs of industry and our clients.

The past quarter was a landmark period where we not only continued our trajectory towards revenue growth, but also achieved notable improvements in our profit margins. This progress underscores our journey toward profitability with a clear focus on sustainable and profitable growth. Strategic investments in our BioStrand platform and an increase in our manufacturing footprint in Europe have been pivotal in securing a larger market share for catering to the increasing demand for our services. This strategic alignment ensures that we are well positioned to lead in the drug discovery and development space propelled by BioStrand’s innovative AI driven software capabilities. Reflecting on our financial and operational strategies, we're proud to report a quarter of robust performance with a total revenue of $6.2 million, marking a 20% year-over-year increase.

We are extremely proud to announce that this achievement marks our fourth quarter of back to back record breaking quarterly revenues at ImmunoPrecise Antibodies. This success is a testament to our strategic focus on sales, customer engagement, and operational efficiencies. Our BioStrand initiative has contributed to the success with early revenue from repeat business with large pharma companies, underscoring the compelling value proposition for our offerings. Our execution strategy underscored by strong customer relationships and effective marketing has not only facilitated growth, but also provided a feedback loop from our customers, enhancing our R&D focus on BioStrand and furthering our competitive edge. Our operational achievements are highlighted by the strategic implementation and integration of the BioStrand technology into our workflows, leading to significant scientific and commercialization advancements.

The seamless integration and strategic expansion of our facilities, such as the Utrecht, and Victoria sites, along with notable growth in our Oss, the Netherlands facility, reflect our commitment to meeting client demands and driving revenue growth. The operational success is particularly notable in our B Cell program, contributing significantly to our discovery projects and revenue, showcasing the strategic and synergistic build of our company. Our scientific endeavors this quarter have been focused on expanding our VHH lead generation and offerings, and optimizing our in silico technologies, including the launch of LENSai epitope binning tool. These advancements not only reinforce our position at the forefront of VHH discovery, but also align our strategic vision of building safer, more efficacious drugs, faster, and with less risk.

Our public speaking commitments at key technology industry conferences, such as HIMSS and Precision Medicine World conference in Silicon Valley demonstrates our commitment to innovation and our role as industry leaders, in part thanks to BioStrand’s entry into the market with validated in silico solutions. As we continue to invest strategically in BioStrand, aiming for a leading position in the industry with our upcoming software rollouts, we are mindful of our spending while ensuring these investments drive significant value and future revenues. BioStrand has developed a foundation AI model by integrating multiple large language models with its HYFTs technology. This model is designed to analyze complex biological data, particularly proteins, by identifying unique patterns and biological sequences, which improves the precision of a prediction and drug discovery and disease research.

This approach allows for the creation of advanced products with reduced research and development costs compared to traditional AI solutions. BioStrand strategy involves balancing the growth of the CR revenue with the further development and integration of computational technology, contributing to advancements in the biopharmaceutical sector by accelerating the process of drug discovery and the development of personalized medicine solutions We are enhancing R&D efficiency through advanced data science. The foundation models prowess in transforming complex biological data sets into actionable insights with minimal computational expense is rooted in a suite of advanced data science methodologies. These methodologies are designed to optimize data processing and analysis, significantly reducing the reliance on extensive data generation and labor-intensive manual analysis.

As we balance our steady CRO revenue growth with continued build-out and integration of in silico technologies, the advantage of the HYFTs allow us to be capital efficient while creating a hub of biotherapeutic intelligence. Now I'll hand it over to our CFO, Kristin Taylor, who will delve into the financial specifics of this quarter in greater detail, highlighting our strategic investments in BioStrand, our operational efficiencies, and our unwavering commitment to delivering on our customers' needs, a strategy that has not only driven our revenue growth, but has also strategically built our company for sustained success in the drug discovery and development industry.

Kristin Taylor : Thank you, Jennifer. I'll provide a brief overview of our financial results for the third quarter of fiscal 2024 before touching on our financial position as of the end of the period, which was January 31st, 2024. As a reminder, all numbers I referenced are in Canadian Dollars unless otherwise noted. Starting with our revenue. For the three months ended January 31st, 2024, we achieved revenues of $6.2 million, representing a 20.3% increase in our revenue of $5.2 million in Q3 of previous year. year. Our year-to-date revenue was $18.1 million, reflecting a 20% increase from our fiscal 2023 year-to-date revenue of $15 million. Supporting this growth, our Utrecht, Netherlands site achieved year-to-date revenue growth of 32% year-over-year and is benefiting from expansion efforts in Q3 of last year, Our Victoria BC site achieved year-to-date revenue growth of 27% year-over-year and will be expanding its wet lab footprint in mid-calendar 2024.

As for the impact of our ongoing expansion, our revenue history shows the results of our focus on continuing to identify and meet our customers' needs. We have demonstrated sustained profitable revenue growth from our wet labs at higher than market rates and continue to expand, and to address not only our customers' needs but also our stakeholders' need. We are continuing to execute on our wet lab expansion by adding much needed lab space plus investing in the further development and launch of our LENSai portal and SaaS platforms. This strategy not just supports even higher revenue growth but gross margin improvements as well. Now on to our operating expenses. Our research and development expenses for the third quarter were approximately $1 million and $3.1 million year-to-date, which represents a $10 million decrease from the previous year.

This decrease reflects the completion of the investments required to build the Talem Therapeutics assets, and now primarily represents our investment in supporting the phased rollout of our BioStrand offerings. Year-to-date sales and marketing expenses remain flat and represent our synergistic sales efforts across our comprehensive antibody discovery and development services, along with efforts towards Talem to out licensing opportunities. And general and administrative expenses for the quarter were $4.1 million and $11.5 million year-to-date. This reflects the decrease from the previous year-to-date balance of $11.7 million as we continue to see results from our strategic cost cutting efforts, even as they continue to grow our revenue and our A.I. offerings.

On to earnings per share. Our growth in revenue and reduction in expenses resulted in a net loss of $2.9 million or $0.11 per share for the quarter versus our third quarter of fiscal 2023 that resulted in the loss $4.7 million, or $0.19 per year. Along with this reduction in net loss, we also experienced a reduction in our overall cash burns. This reduction in cash burn supported us in finishing the third quarter of our fiscal 2024 with unrestricted cash of $6.2 million versus our second quarter cash balance of $6 million and our fiscal 2023 yearend balance of $8.3 million. Additionally, subsequent to the end of our third quarter, on February 23rd, 2024, the company established an at the market equity offering facility, and ATM facility with Clear Street LLC, replacing its previous ATM facility with Jefferies LLC.

This new relationship with Clear Street brings additional support in both raising equity and identifying value-added partnerships to build long-term shareholder value. To provide additional funding for our R&D efforts and wet lab expansion, we initiated a small equity raise in December of 2023, as well as utilized our new ATM facility in early March, 2024. We continue to monitor our cash from operations, as well as the cost of capital versus returns on R&D investment to assess the need to raise funds. With our consistent revenue growth and the R&D efficiency of the LENSai Universal Foundation AI model, we are able to slow down or speed up our R&D efforts as we work to best meet our customers and our partners' needs while building shareholder value.

With that, I'll turn it back to Mandeep for Q&A.

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